Page 2 — Retail Properties Quarterly — February 2020 Contents Letter from the Editor A s we usher in a new decade, it’s an appropriate time to make predictions for upcom- ing retail trends and chang- ing consumer habits. It’s also an interesting time to recognize the impact the next generation of spend- ers – Generation Z – will have on the market.This generation, people born between 1997 and 2010, has “officially entered the economy and will continue to drive traffic back to malls in 2020,” according to CBRE’s 2020 Real Estate Market Outlook. Gen Z is the larg- est, most ethnically diverse generation in American his- tory. By 2026, Gen Z’ers will make up the largest consumer population (82 million) in the U.S., according to BI Intelligence.These consumers grew up with the internet, social networks and mobile systems, making them“digitally native.”The generation is defined by its desire for authenticity and inclusivity and many of themwill support brands that represent their values. So, how do these traits translate into consumer habits? Gen Z’s comfort with technology is predicted to play out in two interesting ways. First, omnichannel retailers will continue to thrive as Gen Z’ers are extremely comfortable researching and purchasing things online. Going one step further, it also means that they’re at ease researching companies and products to make sure their values align. According to a McKinsey report, 70% of Gen Z respondents said they try to purchase products from companies they consider ethical; 65% try to learn the origins of anything they buy; and about 80% refuse to buy goods from companies involved in scandals.They care about the brand, the company that owns it and the network of part- ners and suppliers, which means these values must be upheld by the whole stakeholder system, the report said. One retailer identifying and capital- izing on a shared common value is Patagonia, which just openedWorn Wear, a store in Boulder that sells used clothing.The company recognized an emerging shopper preference for sec- ondhand clothing due to environmen- tal responsibility, Molly Bayer writes on Page 12. The second way this generation’s relationship with technology will impact it is that its members view in- person shopping as an escape from a world inundated with technology. An A.T. Kearney report, referenced by Alex Staneski on Page 10 as well as the CBRE report, found that 81% of Gen Z’ers prefer to shop in stores because it helps them disconnect from the digital world.The CBRE report refers to visiting brick-and-mortar locations “as a form of ‘retail therapy,’ providing respite from constant digital engagement.” Just as soon as retailers have adjusted to millennial demands, in comes the next generation to keep them on their toes. In a refreshing change from all the millennial headlines, it seems Gen Z won’t be responsible for the death of brick-and-mortar stores. Michelle Z. Askeland 303-623-1148, Ext. 104 Gen Z’s upcoming impact Denver enjoys resiliency in changing marketplace Steve Jellinek Denver retail market fundamentals remain strong Jason Schmidt and Chad Murray Best lending options for different retail assets Peter Keepper Predictions for what the new decade will bring Alex Staneski 3 key trends are shaping Boulder’s retail future Molly Bayer Ghost kitchens pick up steam in mountain towns Glen Weinberg Thinking outside the big box: Retail’s revolution Andrea Ackerman The ripple effect of a center’s creative turnaround Brian Pesch Independent retailers thrive in Cherry Creek North Nick LeMasters 4 6 8 10 12 14 16 18 20 Your commercial property loans done right. Take advantage of our local expertise and a national banking presence. Our clients come to Chase for our exceptional service, quick turn times, and a clear path to closing with no surprises. Call Sara Croot, Client Manager at (303) 512-1293 or visit Credit is subject to approval. Rates and programs are subject to change; certain restrictions apply. Terms and conditions subject to commitment letter. Products and services provided by JPMorgan Chase Bank, N.A. ©2020 JPMorgan Chase & Co. All rights reserved. Chase is a marketing name for certain businesses of JPMorgan Chase & Co. and JPMorgan Chase Bank, N.A., Member FDIC. 420236 CHASE COMMERCIAL MORTGAGE LENDING Retail | Mixed Use | Office | Industrial